Q3 2023 SoundHound AI Inc Earnings Call

November 9, 2023

Hello, and welcome to the third.

Third quarter 2023 earnings conference call.

At this time all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone you all didn't hear an automated message advising that youre Hain has been raised.

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Please be advised that today's conference is being recorded.

It is now my pleasure to introduce <unk>.

<unk> of Investor Relations Scott Smith.

Good afternoon, and thank you for joining our third quarter 2023 conference call.

Me today is our CEO, Kevin Roger <unk>, our CFO to the test Sharon.

And with some short remarks before moving to Q&A.

I'd also like to remind everyone that we'll be making forward looking statements on this call.

Actual results could differ materially from those suggested by our forward looking statements.

Please refer to our filings with the SEC for a detailed discussion of the risks and uncertainties that could affect our business.

And for a discussion statements that qualify as forward looking statements.

Additionally, we may discuss certain non-GAAP measures.

Please refer to today's press release for more detailed financial results and further details on the definitions limitations and uses of those measures and reconciliations from GAAP to non-GAAP.

Also note that the forward looking statements on this call are based on information available to us as of today's date.

We undertake no obligation to update any forward looking statements, except as required by law.

Finally, this call is being audio webcast in its entirety on our Investor Relations website.

Audio replay will be available following today's call.

With that I'd like to turn the call over to our CEO Avon Malhotra. Please go ahead.

Thank you Scott and thank you to everyone for joining the call today.

In our third quarter, we saw incredible momentum showcased by a strong revenue performance.

Continue the fast pace in our creation of great products that delight customers and users.

Businesses are seeing the value of sound hunting real time, and this is translating to the value we are creating for our stakeholders.

This quarter, our revenue grew to a record $13 3 million or 52% increase sequentially.

At the same time, our key profit metrics adjusted EBITDA continues to improve significantly driven by operational excellence of our organization.

We've consistently demonstrated our track record as a leading innovator in AI this quarter the products, we are creating exceptional demand.

Automotive assistant regenerative AI features to customer service solutions for every business let.

Let me give you an update.

In our pillar one category with power products, such as auto TV and Iot devices.

Since launching our voice AI platform, our pillar one strategy has been a crucial part of our business.

If people didn't even more excitement and customer interest in townhouse product and solutions.

Take automotive as an example, we recently published the results of a study that over half of regular drivers would like chat GPT stock capabilities from their in vehicle voice assistant.

We believe this will give rise to a steep and rapid increase in the number of drivers actively using voice recognition in their cars.

As a result, our projection is that more drivers will use voice instead of touch interfaces and physical owners at an increasing pace.

We continue to expand in our existing large customer base, which includes over 20 car brands such as Honda against Atlantis.

The automotive brands that have chosen <unk> solutions represents roughly 25% of all units produced in the world today.

As they ramp up production of units enabled with our AI, we expect to see further growth in the corresponding revenue and we have also been winning more logos.

Thanks to its enhanced performance Townhomes have AI for automotive has created a number of upsell opportunities and last month at <unk>.

Became the first in car voice assistant with generative AI capabilities to go live in vehicles in Europe.

Last month, we also launched <unk> digital intelligence, which also generates interest among a number of automotive brands.

And another brand talk the prominent Edr can make here in Turkey continues to ramp and we are actively engaged with a number of other EV companies.

As car makers, both traditional giants and up and coming EDI brands prioritize being more agile software companies. They are interest in Paramount sophisticated voice solutions increases.

But pillar one is not just about autos, we are showing increased usage among all categories youre seeing more queries within the devices be power, including TV and apps, which has increased our annual or quarterly run rate to about $2 9 billion.

As this frequency of usage increases the performance of our machine learning and AI models gets more advanced as they learn from this massive amount of data that keeps growing.

The results will be more intuitive technology, which we expect will create faster adoption, new used cases, and ultimately higher unit prices per device.

For Tvs, we continue to work with established players like Goodyear as well as new and disruptive manufacturers in this space to unlock the true potential of the most prominent connected device in most homes.

In doing this we've seen high double digit growth in usage year over year.

For Iot devices that use cases, and less and we are working with more companies everyday to extend or go into production in multiple areas.

This quarter, we showcased our technology with symbolic group professional coffee machine manufacturer with distribution network covering over 100 countries and involving 700 distributors.

We're also working with some of the largest appliance manufacturers in the world and have either signed extended or gone into production with multiple brands in industries, such as telcos robotics printers vending machines and kiosks.

Moving on to pillar two.

In our pillar two category, we aspire to serve with hundreds of millions of businesses around the world with our AI customer service solutions.

We've been discussing the great traction we are seeing enterprise brands.

We announced Wildcat, our last quarter and this quarter I'm happy to add two more incredible names to the list Jersey Mikes and please be queen.

We've also agreed to a trial with one of the largest global quick serve restaurant in the world for the use of our dynamic interaction drive through solution.

We continue to sign larger deals in mid market and regional restaurant space as well. Some recent wins include chicken shack by my tie Bob accruals Burritos, cardiac eatery, doghouse happy ending hospitality, San Luis 'twenty, burgers, and pizza representing opportunity several hundred locations.

Our expansion in Wildcats with drive throughs is also ramping we are live in approximately a dozen lens in the Midwest and are expanding into new locations in the southwest United States.

We're excited to be working with biocatalyst first class team as they bring the first truly intelligent drags were experienced across the country.

Tom has a unique competitive advantage in this vertical.

One and fully understand the entire conversational AI technology stack, which we have developed over nearly two decades.

This ownership is important and hugely valuable to prospective customers because it means that we are able to fully drive improvements in the technology and its performance rather than hitting the limits of some black box Apis.

Our customers understand not only is this more secure and cost effective it allows for more innovation and customization, which in turn allows for differentiation in their own markets.

With these restaurant solutions, which we first launched last year, we have coverage in about 35 states and continue to increase our footprint across the country at the same time, we're also expanding internationally.

Going beyond restaurants, with our smart answering we are completing as disrupting how businesses of all types directly response, more intelligence and usefully to their customers.

We provide business owners with confidence that our customer relationships are improving while driving increased revenue and helping mitigate costs.

Smart ordering and smart entering are complemented by our mutually enhance on hand dynamic interaction, which is our multimodal full duplex interface for kiosks drive throughs on any device to that screen. We are working with a number of partners and customers in our pipeline keeps growing.

We also continue to build out our point of sales ecosystem by joining although connect now live with several merchants. Although is a significant addition to our ecosystem as a software platform, creating additional potential customer touch points to enterprise brands with more than 77000 locations, adding to more than 150.

Restaurants that use our hardware mentioned partners toast Oracle and square.

Further accelerated our reach we recently launched our Pos gateway solution that streamlines custom merchant integration with some hands voice AI ordering products and accelerates time to market.

We also joined forces with China, leading online ordering on marketing platform. This will help enables restaurants to answer and respond to every inbound customer call. So that orders are never missed.

And just last month, we were pleased to have Samsung partner with us to unlock the power of digital outdoor signage and turned menus into interactive restaurant portals with almost unlimited potential.

In 2016 after about a decade of stealth R&D townhome like launched its breakthrough voice AI technology.

Howard by innovations such as <unk>, meaning a deepen your understanding.

These capabilities allowed our voice assistant solution to process, not just <unk>, but also meaning understanding in real time, just like the human brain.

Our ability to quickly handle complex <unk> access live data remains unmatched in the voice industry today.

We've always believed the future of voice AI would be powered by a combination of software engineering and machine learning.

In our own models, we have been using machine learning for a number of years to improve speech recognition and natural language understanding.

The introduction of large language models has allowed our platform to reach new Heights with our strong foundation of balancing software engineering and machine learning you are easily able to integrate generative AI into our technology stack.

In fact, we believe we are one of the fastest disruptors to take this new technology into production.

Our customers require a mix of real time data and conversational intelligence. Furthermore, they need to make sure. The brands are protected from the type of misinformation and elucidation that occur from access to unmanaged guarantee of AI.

Thanks to our rapid adoption of these recent innovations we are live in market with our generative AI enhanced voice products across our automotive and restaurant customers.

Our San <unk> II product is the first to have this unique blend of technologies and is fueling our momentum with new and existing customers.

Building on our success in automotive market. We recently introduced somehow vehicle intelligence, which provides instant hands free access to vehicles specific information.

Doubt drivers, having to pullover or spend time, leading through a physical manual.

<unk> voice enabled vehicle intelligence domain uses internally developed artificial intelligence and large language models to provide answers to almost any question about the card functionality maintenance or repair completely hands free.

Of course, the opportunities you have this kind of functionality for voice enabled user manuals doesn't begin and end with automotive it can be extended to any device or our clients, allowing your manufacturer to achieve cost savings by lowering the frequency of customer calls and saving customers the hassle of having to find and figure out the instructions.

Okay.

While voice AI ordering technology is now decreasing their reliance on in house staff southbound products can also be used to augment human capabilities.

For example, our voice enabled employee access technology can instruct the restaurant employee about how to make a particular item, allowing them to ask as many questions as they like to ensure that product is perfect without ever having to remove their gloves and consult the manual or distract another staff member.

We initially launched dynamic interaction as a breakthrough multimodal ordering experience for drive throughs and the product has been well received and we are gaining more traction and new customers every quarter.

Since then we have evolved the technology to allow in store employees. The same ordering experience previously limited to end customers.

The ability to process orders visually in real time works equally well in store as it does in drive thru.

Whether it's a customer or employee at the end user.

With our advancements in the restaurant space customers are seeing the benefits of taking orders and filling them simultaneously.

In the automotive and Iot space, we are able to provide real time conversational voice AI experience.

Excited about our continued delivery of key technologies that provide meaningful value to our customers.

Last time I mentioned, our ambitious Polaris initiative is an effort to weave together, our learnings of the last two decades as well as billions of real time conversations and over 1 million hours of audio to produce our own fully multimodal generative AI Foundation model, which kind of worked with both speech and text.

And respond with audio visual output.

I am pleased to say we've completed the first phase of this project and successfully built a multi lingual model that can handle it in multiple languages interchangeably and respond with high accuracy with streaming audio in real time.

We will be rolling out the first version of Polaris to our customers in the coming weeks.

This is an important milestone and we expect even more disruptive features in future phases of Polaris.

You are excited about the potential applications at a model that can respond instantly and seamlessly and in different modalities to request in various languages across a huge range of potential queries. The commercial possibilities are clearly huge.

We believe Samsung is uniquely positioned to achieve significant long term success in this new era of AI.

We have believed from our founding moment that voice and conversational AI is the most natural way to interact with devices and services and eventually permeate through our businesses.

We have an amazing and passionate team that believes in distribution and continues to push forward to create conversational AI technology that exceeds human capabilities and delivers value and delight and users alike.

In closing, we are experiencing meaningful success and with every quarter that goes by our momentum built on our foundation and gets stronger.

Our products significantly reduce cost increase revenue and efficiency for our customers.

Our fully automated technology is unmatched and we remain at the forefront of conversational AI and are winning new businesses and expanding with our existing relationships.

We've now I'll now turn the call over 20, Tesh to talk about our financial performance key growth drivers and outlook for the remainder of the year.

Thank you, Kevin and good afternoon, everyone.

We are pleased to report another strong quarter with record revenue all while continuing to ascend the path to profitability.

Three quarters into 2023, and we have continued to meet our internal milestones, despite a continuously evolving and dynamic macro backdrop.

As each quarter passes the opportunities of bringing AI to life for customers are becoming more vivid more tangible and more confirming of our unique customer value proposition.

Generative AI and large language models are helping us develop natural conversations into a rapidly expanding ecosystem of voice enabled products and services to unearth completely new pathways of human computer interface.

And we are leading at the bleeding edge.

Okay.

And pillar, one where we voice enabled products, we continue to extend our offering across new units, while adding more features such as our new vehicle intelligence solutions with generative AI.

And autos, which represents the majority of this pillar, we increased our new units by 68% and our active cloud users increased by close to 45% versus prior year.

This quarter, we ended with $342 million in cumulative bookings backlog up 13% year over year.

We've added customers across industries, such as in automotive telecommunications, Iot, including coffee machines printers, and TV just to name a few.

In total we have certain contracts that span up to 10 years, representing an average contract length of roughly six five years and as I've stated before these are backend weighted.

These bookings, which mostly correspond to pillar one are derived from committed customer contracts and reflect revenue we expect to realize.

Within these existing contracts and more broadly with those partners, we have massive upside and we continue to add new customers every quarter, Kevin talked about a few of those earlier. We continue to believe this metric should be viewed on an annualized basis since growth can be uneven from quarter to quarter.

Within pillar two way voice enabled services, just last quarter, we expanded our offering beyond restaurants to a much broader customer service space.

<unk> answering.

This quarter, we enhanced dynamic interaction to now work with employees to improve the time from order taking to order fulfillment again, adding new potential users of our products.

For restaurants, our portfolio of solutions is gaining momentum in the market and we're seeing traction in enterprise brands as we move up market and add more regional customers.

Last quarter, we gave a sense of the key metrics, we're watching here and wanted to provide an update on how those have been evolving.

With solely the brands, we have signed to date at scale and full deployment across these customers groups. We would now have over 4500 locations and well over $25 million.

Combined with a rapidly growing pipeline of larger customers, we expect and continue to look for ways for this to accelerate even more in the future.

Yes.

Let me now get specific on our financial results for the third quarter.

In Q3 revenue accelerated by 52% sequentially to $13 3 million.

19% year over year.

Driven by strong growth in our product royalties, primarily in automotive, which included an increase in a multi year minimum guarantee commitment for an edge contract the.

The expansion is mainly driven by an increase in auto units overall as well as continued unit price increases.

Our Iot cloud units also continue to layer on top with both sequential and year over year expansion.

In Q3, our gross margin was 73%, which continues to benefit from the expanding scale of our business and increased data center efficiency.

We achieved this result, despite a 39% year over year increase in cost of revenue for the quarter, which was $3 6 million.

The year over year cost increase was primarily driven by product mix, which included a premium text to speech component in the aforementioned Ed solution that was not in the comparable prior year period.

Total operating expenses improved by nearly a third year over year, largely driven by the corporate restructuring program, we announced in Q1 this year, which affected all line items included.

Included here are certain variable costs and discretionary items that we expect will help drive reduced operating expenses sequentially into Q4.

R&D expenses were $12 $8 million in Q3, a decrease of 34% year over year. However, our investments in key areas have not slowed for example, with Polaris is Kayvon mentioned, our existing talent and expert engineering remains at the forefront of innovation as examples we are advancing the state of large language models with.

ASR automatic speech recognition as well as implementing fully unsupervised training, which have rapidly improve our models.

In addition, we continue to build out our existing suite of products and add new technologies, such as smart answering.

As well as generative AI capabilities for auto and employee assist solutions with dynamic interactions.

Okay.

Sales and marketing expenses were $4 5 million in Q3, a decrease of 33% year over year. We continue to focus on go to market strategies and customer engagement and in particular drive new business growth in subscriptions as seen in the <unk> expansion mentioned earlier.

At the same time, our laser focus on high ROI areas of digital marketing lead generation and customer acquisition.

And through channel partners like <unk>, Oracle and square remains an important part of our overall approach.

G&A expenses were $6 9 million in Q3, a decrease of 28% year over year. This reflects the efficiencies we have been driving as well as some year over year favorability compared to going public costs in the prior year.

To note, we crossed the market threshold for market cap earlier in the summer that now indicates us to become Sox 404, B compliant next fiscal year earlier than we had anticipated as such we're accelerating investments in our internal controls over financial reporting processes. These were plans we had in place for 2024 anyway. So we are just getting a jumpstart.

Frankly, it is about continuing to mature and improve our end to end processes.

Across all operating expenses noncash employee stock compensation was $6 7 million in Q3.

As a result, our operating loss was $14 5 million, which reflects an improvement of 46% year over year.

<unk> was $4 1 million for the quarter this amount interest expense.

Which include ongoing amortization impacts in quarterly interest cost was $5 4 million.

This quarter was a full first full quarter with our new debt in place. So this can be roughly considered a more normalized level of interest expense on a go forward basis.

Net loss was $20 2 million in Q3, an improvement of 33% year over year. This led to a net loss per share in Q3 of <unk> compared to a 15% loss in the prior year, an improvement of more than 40%.

Adjusted EBITDA, which excludes noncash charges of stock compensation, depreciation and amortization as well as other non operating activities was a loss of $7 3 million, which was a 57% year over year improvement.

Net cash used in operating activities for the first nine months was about $54 million, improving roughly 26% year over year.

Our cash position at quarter end was approximately $110 million of which $96 million was cash was in cash and cash equivalents.

As I mentioned last quarter, our capital position is a source of strength and gives us the optionality, we need to drive the business.

Okay.

With that let me discuss our outlook for Q4.

Yeah.

We are set up well for the future and we have a lot of runway ahead of us.

And it is growing meaningfully every quarter.

Our existing contracts give us good visibility for future growth, which is encouraging.

Now with an increased level of conversations with enterprises happening on a regular basis. Our pipeline is building with major brands at various sales cycles stages.

These large deals can be very lumpy and given the size of customers. We are working with what's meaningful or us meaningful for us may not even be material for that occur.

Accordingly, the Q4 guidance range, we're giving reflects that.

Said, where we stand today, we feel confident in an outlook of $16 million to $20 million of revenue and if we deliver in that range. We continue to believe we can achieve adjusted EBITDA positive in Q4.

This wouldn't be a major milestone for the company and quite the turnaround from levels, just a few quarters ago.

We are excited about the growth trajectory building into 2024 and beyond.

We want to be aggressive with the investments that we know customers are clamoring for.

We want to continue to bring our industry, leading solutions to the verticals that we have been discussing and we wanted to accelerate the path to customer adoption.

With a much improved financial profile, we can catalyze ourselves to another level by continuing to stay focused on the amazing opportunities in front of us.

One final note before I close and our upcoming 10-Q, youll see certain revisions to financial information from prior periods. These changes relate to the accounting for completing for the completed financial transactions we had.

And these revisions will impact line items, including other income and expense and certain balance sheet metrics, but we will have no impact on the results related to reported revenue gross margin operating margin adjusted EBITDA or cash balances again.

Specifics will be detailed in our 10-Q.

To summarize.

It is clear the generative AI use case wave theyre starting to hit issuer and we are fueling titled forces as I've said before each quarter brings its own unique dynamics and we know the path forward isn't always linear.

Our focused committed to delivering meaningful business and customer outcomes.

Laying the tracks for long term profitable growth and strong returns.

Thank you and we will now move to Q&A.

Thank you.

Binder to ask a question. Please press star one on your telephone and wait for your needs to be announced.

So withdraw your question. Please press star one again.

Our first question comes from the line of Gil Luria with D. A Davidson.

Thank you and good afternoon. So first question.

But.

Yes.

The Jersey. Mike addition is a very substantial and they have 2600 stores.

And so as we think about you talk about what the.

Would be once fully deployed with all.

All of these current customers before you even bring new ones and how do we think about the timeline to get there so you're talking about dozens of stores rolling out for White Castle.

<unk> represents a white castles, maybe 400 store chain.

Represents a certain deployment is there an inflection point, where theres enough units with enough track record that encourages other franchisees to accelerate.

And can we apply the same percentages to a much bigger chain like Jersey Mikes.

Yes, absolutely great question so first.

This really highlights that our strategy is working and our offering is really resonating.

AI and automation and can save cost increase revenue and improve the user experience and.

Our restaurant customers.

You'll see that it used to be that we have to go and educate them another more coming to us.

It has become more like automotive company that they know they need voice AI. So it's been a big shift in the last year or so.

And we will share more in upcoming announcements about these two brands, but I can share some quick highlights now.

So Jeremy Mike is.

Our AI solutions for smart ordering over the phone. These brands usually start small with a couple of locations before we expand but in this case you are actually very proud that they would start with 50 locations.

Initially and golf of course is to expand to the numbers that you mentioned.

So we are.

Encouraged by the initial.

Number that is much bigger than in other cases that you have experienced.

Sure.

Once they experience the quality of our solution they will.

<unk> grow quite fast.

Again share more in our upcoming announcement more detail about the partnership.

And so the other brands.

Sure if youre going to ask you about the equity cream, that's actually a dynamic interaction solution to support the drive throughs.

Maybe if it's okay can I just add a couple of elements on there if that's all right.

Yeah, and I have kind of three three premise is maybe just to build number one of course the characteristics of each restaurant. The fragrance. Some have franchisees, where you have to kind of have multiple conversations some are fully corporate so there is.

Different franchisees have different.

Sometimes they take the corporate technology downward, sometimes you need to have multiple conversations that can affect the timeline a little bit.

The other thing that we're really excited with some of these restaurants and a lot of these conversations are very fluid. So I'll just be generic like we go in with product one and we can build up with product two and three.

Good examples like smart answering we go in with Smartwater, and we add on smart answering or vice versa and some of these other employee assist capabilities that we're bringing so we actually see that these <unk> per franchise can also grow which is very exciting and then just the last thing which is ultimately you want a product where the consumer loves it covers it whether thats where they want.

Go and Theres technological things that both Kayvon cable I've mentioned, and obviously you can add a lot more depth to this but one small example, things that we're focused on for example, where we're going to get.

Towards fully unsupervised learning and help that robustly really accelerate how our product works.

To get the more data than that.

The insights that we can then.

Unsupervised way just improve rapidly gives us a lot of confidence of how we can improve the technology concurrently with how we scale this across different locations. So so theres a lot to be excited about here.

Yeah Yeah.

So in the test.

On your guidance.

Obviously, a really big milestone crossing over to positive adjusted EBITDA.

But you gave us a range on revenue and a point on adjusted EBITDA are you, saying that even at $60 million revenue adjusted EBITDA can be positive.

Then the extension of this question to say now that Youre going to hit this milestone probably earlier than expected.

How do you see the tradeoff between growth and profitability in your new framework with the new staffing levels that you have.

Yeah.

Maybe I can.

Work backwards on your question if that's all right because they are interrelated. The tradeoff is key I think they sort of work together. One is you want to build a healthy financial profile and by the way breakeven will be a milestone on our long term journey towards what we believe is predominantly software AI business.

We can get very attractive margins over time as we scale. So we need to have that long term vision at the forefront of every decision we make and as you know very well the AI spaces is that is there.

Rapidly evolving and we have to be thoughtful when customers are sort of clamoring for this capability from us because there are labor pressures and they really want to help them in their employee base and we want to go and attack that opportunity, we don't want to sit back and say well, we got a we got cut over here. So we'll come back to a nine months like that doesn't really work for our customers. So we got to be very.

Cognizant of that.

The other thing that sort of plays out is just that.

No.

Over time, we need to be primarily I think focused on the disruptive market opportunity, we have but we'll be cognizant of capital base and so forth.

We're not.

We did a lot of the capital raising earlier this year and we've put ourselves in a really strong position but.

Building that that solid foundation profile is critical so maybe using that long winded comment. It's your first part of your question.

It's a range we provided on revenue I think I want to give directionality on adjusted EBITDA like frankly, generally I think of that as sort of a midpoint and then you could go up or down so.

At the low end that will obviously put pressure on that and then it would all be contingent on some of the choices.

We make.

Yes, I'd say at the higher end, even more confidence rate that we would be crossing through that so I give that as a bit of a rough estimate, but obviously to your point the range on revenue I mentioned in the prepared remarks that we are working on a multitude of pretty sizable deals of which the probabilities are not certain.

And so it depends on how those play out in some of those things if they pivot a bit of a month or a few weeks or a few days here or there can affect how the particular quarter plays out, but I can confidently say that what we're building into 2020 for the stabilization and the improvement in the financial profile and its hard for me not to go retrospectively back to where we started this year and say we really.

Amazing strides to get our situation in a much better position and then even more meaningfully the traction we're getting with customers. Some of the brands Youre starting to hear and by the way. There's a lot of brands that we just can't announced do you think that's a conversation we're continuously having with them. That's the momentum we need to keep building into 2024. So hopefully that gives you a bit of that context.

Definitely thank you.

Thanks, Kevin. Thank you one moment please for our next question.

And our next question comes from the line of Vivek <unk> with J M N investment research.

Hi, there do they come from Mike Latimore of Northland Capital I have a couple of questions with me and the first one is did you have a 10% customer in third quarter.

Yes, we have we do disclose our customer.

Concentration in our Qs and we do have a few quarter customers that do contribute a meaningful part of our total revenue. They currently tend to be on the auto side, and we've announced that we have in our public materials. Some of those great partners actually in this.

Our prepared remarks, we talked about a few of them. So yes, we do have some customer concentration as heavy in the auto today in the product set that we're building with restaurants, and we talked about a couple of those brands in the prepared remarks, that's really what we're building.

So the short answer is yes and.

They're great partnerships, we're expanding growing adding more.

And then I'd say their massive global enterprises. So for US. There is also a little bit of diversification that we get diversity of that contribution across the globe. So like in the autos, we participate let's say brand in America, and we take that same brand in the Asia and Europe et cetera.

Okay.

The next question is can you. Please elaborate on any partnerships that are generating strong leads of bookings.

Sure.

You may be a little bit of context.

Sure.

Again back to the autos, maybe I'll, maybe I'll back up a step so.

In the auto space, we've talked about partners like <unk>. These are.

Long term partners for US we scale differentiated added new capabilities, we got cloud capabilities in the in the cockpit of the car we've extended to edge hybrid.

We're providing different capabilities with <unk>.

Publicly announced in Europe.

<unk>.

Amazing technological leap ahead with degenerative AI solution, where hopefully you can take a peek at some of what they are.

Published in <unk>.

The capabilities of what we're bringing to car to ask a whole array of different things youre on a long drive and you have young kids in the back and you want your car to tell it until you get the story to put them to bed like you can do that you can ask directions. You can you can find out what happened the game yesterday. So we're expanding in those are those are going to be critical pillars for us for a long time and by the way I think we mentioned.

That a lot in the prepared remarks beyond auto some of the.

Non auto product companies, the Iot space of the TV manufacturers, we talked about coffee makers that we're excited too.

To be partnering with so on pillar one as we characterize voice, enabling products. There's a lot of great customers and partners that are contributing meaningfully to our bookings number.

<unk> to the restaurant side actually kind of we kind of and I mentioned this in prepared remarks that we dimensionalize a little bit more on the <unk> side and I noted a couple of points there. So.

Last time, we talked about we are building partnerships with at scale full deployment across their ecosystems with the restaurants that we worked with white castles. One notable one this time, we talked about Jersey mikes.

And others last time, we were at about 500 locations that has gone up to 4500 locations.

Last time, I mentioned was $10 million, that's gone up to 25 million. So just give you a sense of the pace.

That is rapidly growing so that will be an increasingly part of our book of business, but frankly, we're not stopping there it's beyond even restaurants into more customer service verticals that we can go after personal care.

And onwards, and ultimately what we're trying to do is build and we've talked about this before in our three pillar strategy is bring pillar one voice enabled products together with voice enabled services in pillar two and provide.

The three monetization opportunities and when you see the intersection of being able to drive around in excess of the type of food or drink that you want when you want how you want it you can see how that can build over time.

That can be a little characterization, probably a little bit more than you were asking for.

Yes.

Thanks have a nice rest of the bank.

Alright, Thank you very much.

Thank you one moment please for our next question.

Yes.

And our next question comes from the line of Scott <unk> with.

With HC Wainwright.

Hey, good afternoon, guys. Thanks for taking my questions.

I guess first could you help give a little color on how we should expect.

Kind of cadence of maturation for a relationship like although I mean is this something that takes six to nine months just to educate before you can actually push out to some of their individual vendors.

That six to nine months is behind us. So we already did the integration and the partnership and when we announced the exits at the maturity level.

We're already live with.

That use although in production.

Perfect. That's helpful and then just yet.

1770, 7000 locations that use other.

Perfect and then just given the momentum on the restaurant side do you guys have the capacity to.

Implement where you need to or is there a fair amount of higher you need to do there to help you out with that process.

Absolutely you're already in.

In fact <unk>.

I believe the only player in this market that is able to serve smbs. So most of our peers have too.

The only target.

That half.

Our high hundreds of locations because onboarding is a massive undertaking for them but for us.

A lot of those steps are automated so we can actually sign up a single location.

Sandwich shop.

And we can onboard them very quickly and we have quite a few of those.

Great I appreciate that came on and then last one just quick.

Any negative impact from the autoworkers strike here in the U S over the last few months.

No no direct impact.

First I'll say on the immediate we don't work with the three big three.

In the U S. The launch is a big partner for Us in Europe, and we haven't seen an extension impact to them.

Maybe in terms of opportunities maybe that conversation has slowed a little bit but like no.

We don't there's no direct impact to the extent that things.

Permeate down we haven't really seen an impact from that we are watching it.

It seems like things are moving constructively.

Yes, I mean, there is.

<unk>.

For US no no is the short answer.

Great I appreciate that Natasha congrats on the progress guys. Thanks again.

Thanks, so much Scott.

Thank you.

Ladies and gentlemen, thank you for participating. This concludes today's program you may now disconnect.

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

Yeah.

Yes.

Okay.

[music].

Hello, and welcome to the <unk> third quarter 2023 earnings conference call at.

At this time all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advising that your hain has been raised.

So whats draw your question. Please press star one again.

Please be advised that today's conference is being recorded.

It is now my pleasure to introduce head of Investor Relations Scott Smith.

Good afternoon, and thank you for joining our third quarter 2023 conference call.

Me today is our CEO, Kevin Roger and our CFO with a test Sharon will begin with some short remarks before moving to Q&A.

We would also like to remind everyone that we'll be making forward looking statements on this call.

Actual results could differ materially from those suggested by our forward looking statements.

Please refer to our filings with the SEC for a detailed discussion of the risks and uncertainties that could affect our business.

And for a discussion statements that qualify as forward looking statements.

In addition, we may discuss certain non-GAAP measures.

Please refer to today's press release for more detailed financial results and further details on the definitions limitations and uses of those measures and reconciliations from GAAP to non-GAAP.

Also note that the forward looking statements on this call are based on information available to us as of today's date.

We undertake no obligation to update any forward looking statements, except as required by law.

Finally, this call is being audio webcast in its entirety on our Investor Relations website.

Audio replay will be available following today's call.

With that I'd like to turn the call over to our CEO Kayvon Malhotra. Please go ahead.

Thank you Scott and thank you to everyone for joining the call today.

In our third quarter, we saw incredible momentum showcased by a strong revenue performance.

Continue the fast pace in our creation of great products that delight customers and users.

Businesses are seeing the value of 500 real time and this is translating to the value we are creating for our stakeholders.

This quarter, our revenue grew to a record $13 3 million or 52% increase sequentially.

At the same time, our key profit metrics adjusted EBITDA continues to improve significantly driven by operational excellence of our organization.

We've consistently demonstrated our track record as a leading innovator in AI this quarter the products, we are creating exceptional demand.

Automotive assistant regenerative AI features to customer service solutions for every business let.

Let me give you an update.

In our pillar one category Repower products, such as auto Tvs and Iot devices.

Since launching our voice AI platform, our pillar one strategy has been a crucial part of our business.

Jeremy its Steve I think even more excitement and customer interest in town enhanced product and solutions.

Take automotive as an example, we recently published the results of a study that over half of regular drivers with like chat GPT stock capabilities from their in vehicle voice assistant.

We believe this will give rise to a steep and rapid increase in the number of drivers actively using voice recognition in their cars.

As a result, our projection is that more drivers will use voice instead of touch interfaces and physical owners manuals at an increasing pace.

We continue to expand in our existing large customer base, which includes over 20 car brands such as Honda against Atlantis.

The automotive brands that have chosen <unk> solutions represents roughly 25% of all units produced in the world today.

As they ramp up production opportunities enabled with our AI, we expect to see further growth in the corresponding revenue and we have also been winning more logos.

Thanks to its enhanced performance Townhomes have AI for automotive has created a number of asset opportunities and last month. It became the first in car voice assistant regenerative AI capabilities to go live in vehicles in Europe.

Last month, we also launched <unk> visual intelligence, which also generates interest among a number of automotive brands.

And another brand talk the prominent Edr can make here in Turkey continues to ramp and we are actively engaged with a number of other EV companies.

Carmakers, both traditional giants and up and coming EDI brands prioritize being more agile software companies. They are interest in Allentown sophisticated voice AI solutions increases.

As this frequency of usage increases the performance of our machine learning and AI models gets more advanced as they learn from this massive amount of data that keeps growing.

The results will be more intuitive technology, which we expect will create faster adoption, new used cases, and ultimately higher unit prices per device.

For Tvs, we continue to work with established players like video as well as new and disruptive manufacturers in this space to unlock the true potential of the most prominent connected device in most homes.

In doing this we've seen high double digit growth in usage year over year.

For Iot devices that use cases, and they are working with more companies everyday to extend or go into production in multiple areas.

This quarter, we showcased our technology with symbolic group professional coffee machine manufacturer with distribution network covering over 100 countries and involving 700 distributors.

We're also working with some of the largest appliance manufacturers in the world and have either signed extended or gone into production with multiple clients in industries, such as telcos robotics printers vending machines and kiosks.

Moving on to pillar two.

In our pillar II category, we asked prior to startup is hundreds of millions of businesses around the world with our AI customer service solutions.

We've been discussing the great traction we are seeing enterprise events.

We announced wildcat or last quarter and this quarter I am happy to add two more incredible names to the list Jersey, Mike's and please be clean.

We've also agreed to a trial with one of the largest global quick serve restaurant in the world for the use of our dynamic interaction drive through solution.

We continue to sign larger deals in mid market and regional restaurant space as well. Some recent wins include chicken shack by my tie Bob accrual Burritos core like Italy, Doghouse, happy ending hospitality, San Luis 'twenty, burgers, and pizza representing opportunity several hundred locations.

Our expansion in White Castle drive throughs is also ramping we are live in approximately a dozen lens in the Midwest and are expanding into new locations in the southwest United States.

We're excited to be working with black castle's first class team as they bring the first truly intelligent drive through experience across the country.

Tom has a unique competitive advantage in this vertical.

We own and fully understand the entire conversational AI technology stack, which we have developed over nearly two decades.

Our customers understand not only is this more secure and cost effective it allows for more innovation and customization, which in turn allows for differentiation in their own markets.

Going beyond restaurants, with our smart answering we are completing as disrupting how businesses of all types directly respond more intelligence and usefully to their customers.

We provide business owners with confidence that their customer relationships are improving while driving increased revenue and helping mitigate costs.

Smart ordering and smart entering are complemented by our visually enhanced on hand dynamic interaction, which is our multimodal full duplex interface for kiosks drive throughs on any device with the screen.

Working with a number of partners and customers in our pipeline keeps growing.

We also continued to build out our point of sales ecosystem by joining <unk> connect now live with several merchants. Although is a significant addition to our ecosystem as a software platform.

Waiting additional potential customer touch points to enterprise brand with more than 77000 locations.

Link to more than 150000 restaurants that use our hardware mentioned partners toast Oracle and square.

Sure.

Further accelerated our reach we recently launched our Pos gateway solution that streamlines custom merchant integration, which sometimes voice AI ordering products and accelerates time to market.

We also joined forces with China, leading online ordering and marketing platform. This will help enables restaurants to answer and respond to every inbound customer call. So that orders are never missed.

In 2016 after about a decade of stealth R&D Samsung launched its breakthrough voice AI technology powered by innovations such as Easter, meaning and deepen your understanding.

These capabilities allowed our voice assistant solution to process, not just <unk>, but also meaning understanding in real time, just like the human brain.

Our ability to quickly handle complex <unk> access live data remains unmatched in the voice industry today.

We've always believed the future of voice AI would be powered by a combination of software engineering and machine learning.

In our own models, we have been using machine learning for a number of years to improve speech recognition and natural language understanding.

The introduction of large language models has allowed our platform to reach new Heights with our strong foundation of balancing software engineering and machine learning.

We're easily able to integrate generative AI into our technology stack.

In fact, we believe we are one of the fastest disruptors to take these new technology into production.

Our customers require a mix of real time data and conversational intelligence further.

They're more they need to make sure that brands are protected from the type of misinformation and elucidation that occur from access to unmanaged guarantee of AI.

Thanks to our rapid adoption of these recent innovations we are live in market with our generative AI enhanced voice products across our automotive and restaurant customers.

Our San <unk> II product is the first to have this unique blend of technologies and is fueling our momentum with new and existing customers.

Building on our success in automotive market. We recently introduced somehow vehicle intelligence, which provides instant hands free access to vehicles specific information without drivers, having to pullover or spend time leaking through physical manual.

Compounds voice enabled vehicle intelligence domain uses internally developed artificial intelligence and large language models to provide answers to almost any question about the card functionality maintenance or repair completely hands free.

Of course, the opportunities you have this kind of functionality for voice enabled user manuals doesn't begin and end with automotive it can be extended to any device or appliance, allowing your manufacturer to achieve cost savings by lowering the frequency of customer calls and saving customers the hassle of having to find and figure out the instructions.

Okay.

While voice AI ordering technology is now decreasing their reliance on in house staff southbound products can also be used to augment human capabilities.

For example, our voice enabled employee assist technology can instruct the restaurant employee about how to make a particular item, allowing them to ask as many questions as they like to ensure that product is perfect without ever having to remove their gloves and consolidate manual or distract another staff member.

Since then we have evolved the technology to allow in store employees. The same ordering experience previously limited to end customers.

The ability to process orders visually in real time works equally well in store as it does in drive through whether it's a customer or employee as the end user.

With our advancements in the restaurant space customers are seeing the benefits of taking orders and filling them simultaneously in the automotive and Iot space. We are able to provide real time conversational voice. The ox variance. We are excited about our continued delivery of key technologies that provide meaningful value to our customers.

And respond with audio visual output.

I'm pleased to say we've completed the first phase of this project and successfully built a multi lingual model that can handle correlate in multiple languages interchangeably and respond with high accuracy with streaming audio in real time.

We will be rolling out the first version of Polaris to our customers in the coming weeks.

This is an important milestone and we expect even more disruptive features in future phases of Polaris.

We are excited about the potential applications of a model that can respond instantly and seamlessly and in different modalities to request in various languages across a huge range of potential queries. The commercial possibilities are clearly huge.

We believe Samsung is uniquely positioned to achieve significant long term success in this new era of AI.

We have believed from our founding moment that voice and conversational AI is the most natural way to interact with devices and services and eventually permeate through all businesses.

In closing, we are experiencing meaningful success and with every quarter that goes by our momentum built on our foundation and get stronger.

Our products significantly reduce cost increase revenue and efficiency for our customers.

Our fully automated technology is unmatched and we remain at the forefront of conversational AI and are winning new businesses and expanding with our existing relationships.

We've now I'll now turn the call over 20, Tesh to talk about our financial performance key growth drivers and outlook for the remainder of the year.

Thank you, Kevin and good afternoon, everyone.

We are pleased to report another strong quarter with record revenue all while continuing to ascend the path to profitability.

Three quarters into 2023, and we have continued to meet our internal milestones, despite a continuously evolving and dynamic macro backdrop.

As each quarter passes the opportunities of bringing AI to life for customers are becoming more vivid more tangible and more confirming of our unique customer value proposition.

Okay.

And we are leading at the bleeding edge.

Okay.

Until the one where we voice enabled products, we continue to extend our offering across new units, while adding more features such as our new vehicle intelligence solutions with generative AI.

And autos, which represents the majority of this pillar, we increased our new units by 68% and our active cloud users increased by close to 45% versus prior year.

This quarter, we ended with $342 million in cumulative bookings backlog up 13% year over year.

We've added customers across industries, such as in automotive telecommunications, Iot, including coffee machines printers, and TV just to name a few.

In total we have certain contracts that span up to 10 years, representing an average contract length of roughly six five years and as I've stated before these are backend weighted.

These bookings, which mostly correspond to pillar one are derived from committed customer contracts and reflect revenue we expect to realize.

Within pillar two way voice enabled services, just last quarter, we expanded our offering beyond restaurants to a much broader customer service base.

Mart answering.

This quarter, we enhanced dynamic interaction to now work with employees to improve the time from order taking to order fulfillment again, adding new potential users of our products.

Sure.

For restaurants, our portfolio of solutions is gaining momentum in the market and we are seeing traction in enterprise brands as we move up market and add more regional customers.

Last quarter, we gave a sense of the key metrics, we're watching here and wanted to provide an update on how those have been evolving.

With solely the brands, we have signed to date at scale and full deployment across these customers groups. We would now have over 4500 locations and well over $25 million.

Sure.

Combined with a rapidly growing pipeline of larger customers, we expect and continue to look for ways for this to accelerate even more in the future.

Okay.

Let me now get specific on our financial results for the third quarter.

In Q3 revenue accelerated by 52% sequentially to $13 3 million.

And 19% year over year.

Driven by strong growth in our product royalties, primarily in automotive, which included an increase in our multi year minimum guaranteed commitment for an edge contract the.

The expansion is mainly driven by an increase in auto units overall as well as continued unit price increases.

Our Iot cloud units also continue to layer on top with both sequential and year over year expansion.

In Q3, our gross margin was 73%, which continues to benefit from the expanding scale of our business and increased data center efficiency.

We achieved this result, despite a 39% year over year increase in cost of revenue for the quarter, which was $3 6 million.

The year over year cost increase was primarily driven by product mix, which included a premium text to speech component and the aforementioned Ed solution that was not in the comparable prior year period.

Total operating expenses improved by nearly a third year over year, largely driven by the corporate restructuring program, we announced in Q1 this year, which affected all line items included.

Included here are certain variable costs and discretionary items that we expect will help drive that reduced operating expenses sequentially into Q4.

R&D expenses were $12 8 million in Q3, a decrease of 34% year over year. However, our investments in key areas have not flowed for example, with Polaris is Kayvon mentioned, our existing talent and expert engineering remains at the forefront of innovation.

Examples we are advancing the state of large language models with ASR automatic speech recognition as well as implementing fully unsupervised training, which have rapidly improve our models.

In addition, we continue to build out our existing suite of products and add new technologies, such as smart answering.

As well as generative AI capabilities for auto and employee assist solutions with dynamic interaction.

Okay.

At the same time, our laser focus on high ROI areas of digital marketing lead generation and customer acquisition.

Correct and through channel partners like <unk>, Oracle and square remains an important part of our overall approach.

To note, we crossed the market threshold for market cap earlier in the summer that now indicates us to become Sox 404, B compliant next fiscal year earlier than we had anticipated as such we are accelerating investments in our internal controls over the financial reporting processes. These were plans we had in place for 2024 anyway. So we're just getting a jumpstart.

And frankly, it is about continuing to mature and improve our end to end processes.

Across all operating expenses noncash employee stock compensation was $6 7 million in Q3 as a result, our operating loss was $14 5 million, which reflects an improvement of 46% year over year.

<unk> was $4 1 million for the quarter this amount interest expense.

Which include ongoing amortization impacts in quarterly interest cost was $5 4 million.

This quarter was a full first full quarter with our new debt in place. So this can be roughly considered a more normalized level of interest expense on a go forward basis.

Net loss was $20 2 million in Q3, an improvement of 33% year over year. This led to a net loss per share in Q3 of <unk> compared to a 15% loss in the prior year, an improvement of more than 40%.

Net cash used in operating activities for the first nine months was about $54 million, improving roughly 26% year over year.

Our cash position at quarter end was approximately $110 million of which $96 million was cash was in cash and cash equivalents.

As I mentioned last quarter, our capital position is a source of strength and gives us the optionality, we need to drive the business.

Okay.

With that let me discuss our outlook for Q4.

Yes.

We are set up well for the future and we have a lot of runway ahead of us.

And it is growing meaningfully every quarter.

Our existing contracts give us good visibility for future growth, which is encouraging.

Now with an increased level of conversations with enterprises happening on a regular basis. Our pipeline is building with major brands at various sales cycles stages.

These large deals can be very lumpy and given the size of customers. We are working with what's meaningful or us meaningful for us may not even be material for them.

Accordingly, the Q4 guidance range, we're giving reflects that.

<unk>, where we stand today, we feel confident in an outlook of $16 million to $20 million of revenue and if we deliver in that range. We continue to believe we can achieve adjusted EBITDA positive in Q4.

This wouldn't be a major milestone for the company and quite the turnaround from levels, just a few quarters ago.

We are excited.

About the growth trajectory building into 2024 and beyond.

We want to be aggressive with the investments that we know customers are clamoring for it.

We want to continue to bring our industry, leading solutions to the verticals that we have been discussing and we want to accelerate the path to customer adoption.

With a much improved financial profile, we can catalyze ourselves to another level by continuing to stay focused on the amazing opportunities in front of us.

One final note before I close and our upcoming 10-Q, you will see certain revisions to financial information from prior periods. These changes relate to the accounting for completing for the completed financial transactions, we had and.

These revisions will impact line items, including other income and expense and certain balance sheet metrics, but we will have no impact on the results related to reported revenue gross margin operating margin adjusted EBITDA or cash balances.

Again.

Specifics will be detailed in our 10-Q.

To summarize.

It is clear the generative AI use case waves are starting to hit issuer and we are fueling titled forces as I've said before each quarter brings its own unique dynamics and we know the path forward isn't always linear.

Our focused committed to delivering meaningful business and customer outcomes.

Laying the tracks for long term profitable growth and strong returns.

Thank you and we will now move to Q&A.

Thank you.

Binder to ask a question. Please press star one one on your telephone and wait for your needs to be announced.

So withdraw your question. Please press star one again.

Our first question comes from the line of Gil Luria with da Davidson.

Thank you and good afternoon.

First question.

But.

The Jersey. Mike addition is a very substantial and they are in 2006 hundred stores.

And so as we think about you talk about what the.

Would be once fully deployed with all.

All of these current customers before you even bring new ones and how do we think about the timeline to get there so you're talking about dozens of stores rolling out for White Castle.

<unk> represents a white castles, maybe 400 store chain. So that represents a certain deployment is there an inflection point, where theres enough units with enough track record that encourages other franchisees to accelerate.

And can we apply the same percentages.

To a much bigger chain like Jersey Mikes.

Yes, absolutely great question so first.

This really highlights that our strategy is working and our offering is really resonating.

On automation and can save cost increase revenue and improve the user experience and.

Our restaurant customers.

We see that it used to be that you have to go and educate them now they are coming to us.

It has become more like automotive company that they know they need voice AI. So it's been a big shift in the last year or so.

And we will share more in upcoming announcements about these two brands, but I can share some quick highlights now.

So Jeremy Mike is.

Our AI solutions for smart ordering over the phone. These brands usually start small with a couple of locations before we expand but in this case you have to be very proud that they were probably 50 locations.

Initially and then go up of course is to expand to the numbers that you mentioned.

So we are.

Encouraged by the initial <unk>.

Number that is much bigger than in other cases, you have experienced and we hope that.

Once they experience the quality of our solution they will.

Growth quite fast.

Again share more in our upcoming announcement more detail about the partnership.

And so the other brands.

Sure if youre going to ask you about the equity cream, that's actually a dynamic interaction solution to support the drive throughs.

Kelly, maybe if it's okay can I just add a couple of elements on there if that's all right.

And I have kind of three three premise is maybe just to build number one of course the characteristics of each restaurant. The fragrance. Some have franchisees, where you have to kind of have multiple conversations some are fully corporate so there is.

And different franchisees have different.

Sometimes they take the corporate technology downward, sometimes you need to have multiple conversations that can affect the timeline a little bit.

Other thing that we're really excited with some of these restaurants and a lot of these conversations are very fluid. So I'll just be generic like we go in with product one and we can build up with product two and three.

Examples like smart answering we go in with Smartwater, and we add on smart answering or vice versa and some of these other employee assist capabilities that we're bringing so we actually see that these <unk> per franchise can also grow which is very exciting and then just the last thing which is ultimately you want a product where the consumer loves it covers it whether thats where they want.

And there is technological things that both Kayvon cable I've mentioned, and obviously you can add a lot more depth to this but one small example, things that we're focused on for example, where we're going to get.

Towards fully unsupervised learning and help that robustly really accelerate how our product works.

To get the more data than that.

The insights that we can then.

Unsupervised wages improve rapidly gives us a lot of confidence of how we can improve the technology concurrently with how we scale this across different locations. So so theres a lot to be excited about here.

Yeah, Yeah, so in the test.

On your guidance.

Obviously, a really big milestone crossing over to positive adjusted EBITDA.

But you gave us a range on revenue.

And a point on adjusted EBITDA are you, saying that even at $60 million revenue adjusted EBITDA can be positive.

And then the extension of this question to say now that Youre going to hit this milestone probably earlier than expected.

How do you see the trade off between growth and profitability in your new framework with the new staffing levels that you have.

Yeah.

Maybe I can.

Work backwards on your question, if that's all right because they are interrelated.

The tradeoff is key I think that they sort of work together. One is you want to build a healthy financial profile and by the way breakeven will be a milestone on our long term journey towards what we believe is predominantly software AI business we can.

We can get very attractive margins over time as we scale. So we need to have that long term vision at the forefront of every decision we make and as you know very well the AI spaces is that is there.

Rapidly evolving and we have to be thoughtful when customers are sort of clamoring for this capability from us because there are labor pressures and they really want to help them in their employee base and we want to go and attack that opportunity, we don't want to sit back and say well, we got a we got cut over here. So we'll come back to you in nine months like that doesn't really work for our customers. So we've got to be very.

Cognizant of that.

The other thing that sort of plays out is just that.

No.

Over time, we need to be primarily I think.

Focused on the disruptive market opportunity, we have but we'll be cognizant of capital base and so forth.

We're not.

We did a lot of the capital raising earlier this year and we've put ourselves in a really strong position but.

Building that that solid foundation profile is critical so maybe using that long winded comment. It's your first part of your question.

It's a range we provided on revenue I think I want to give directionality on adjusted EBITDA like frankly, generally I think of that as sort of a midpoint and then you could go up or down so.

At the low end that will obviously put pressure on that and then it would all be contingent on some of the choices.

We make.

I'd say at the higher end, even more confidence rate that we would be crossing through that so I give that as a bit of a rough estimate, but obviously to your point the range on revenue I mentioned in the prepared remarks that we are working on a multitude of pretty sizable deals of which the probabilities are not certain.

<unk> made amazing strides to get our situation in a much better position and then even more meaningfully the traction we're getting with customers. Some of the brands Youre starting to hear and by the way there's a lot of brands that we just can't announce.

Conversation, we're continuously having with them that's the momentum we need to keep building into 2024. So hopefully that gives you a bit of that context.

Definitely thank you.

Thanks, Kevin. Thank you one moment please for our next question.

And our next question comes from the line of Vivek <unk> with J M N investment research.

Hi, then vivek on for Mike Latimore of Northland capital.

Have a couple of questions with me and the first one is did you have a 10% customer in third quarter.

Yes, we have we do disclose our customer.

Public materials some of those great partners actually in this.

<unk> prepared remarks, we talked about a few of them. So yes, we do have some customer concentration that is heavy in the auto today in the product set that we're building with restaurants, and we talked about a couple of those brands in the prepared remarks, that's really what we're building.

So the short answer is yes, and yes.

They're great partnerships, we're expanding growing adding more and then I would say there are massive global enterprises. So for US Theres also a little bit of diversification that we get diversity of that contribution across the globe. So like in the autos, we participate let's say brand in America, and we take that same brand in the Asia.

Europe et cetera.

Okay.

Our next question is can you. Please elaborate on any partnerships that are generating strong lease up bookings.

Sure.

I'll give you maybe a little bit of context on.

But getting back to the autos, maybe I'll, maybe I'll back up is that so.

The auto space, we've talked about partners like <unk>.

Our.

Long term partners for US we scale differentiated added new capabilities, we got cloud capabilities in the in the cockpit of the car we've extended to edge hybrid.

We're providing different capabilities with <unk>.

They publicly announced in Europe.

<unk>.

Amazing technological leap ahead with degenerative AI solution, where hopefully you can take a peek at some of what they Pablo.

Published.

In terms of the capabilities that we're bringing the car to ask a whole array of different things youre on a long driving you have young kids in the back and you aren't Jakarta tell US tell your kids the story to put them to bed like you can do that you can ask directions. You can you can find out what happened the game yesterday.

We're expanding in those are those are going to be critical pillars for us for a long time and by the way I think we mentioned it a lot in the prepared remarks with beyond auto some of the.

Non auto product companies, the Iot space of the TV manufacturers, we talked about coffee makers that were excited too.

To be partnering with so on pillar one as we characterize voice, enabling products. There's a lot of great customers and partners that are contributing meaningfully to our bookings number pillar to the restaurant side actually kind of we kind of and I mentioned this in prepared remarks that we dimensionalize it a little bit more on the <unk> side and I noted a couple of points there. So.

Last time, we talked about we're building partnerships with at scale full deployment across their ecosystems with the restaurants that we worked with white castles. One notable one this time, we talked about Jersey Mikes and.

Others.

Last time, we were at about 500 locations that has gone up to 4500 locations.

Last time, I mentioned was $10 million, that's gone up to 25 million. So just give you a sense of the pace.

That is rapidly growing so that will be an increasingly part of our book of business, but frankly, we are not stopping there it's beyond even restaurants into more customer service verticals that we can go after personal care.

Three monetization opportunities and when you see the intersection of being able to drive around in excess of the type of food or drink that you want when you want how you want it you can see how that can build over time. So hopefully that gives you a little characterization of probably a little bit more than you were asking for.

Yeah that helps thanks, thanks have a nice rest of the bank.

Alright, Thank you very much.

Thank you.

Please for our next question.

Yes.

Yeah.

Your next question comes from the line of Scott <unk> with.

With HC Wainwright.

Hey, good afternoon, guys. Thanks for taking my questions.

I guess first could you help give a little color on how we should expect.

That six to nine months is behind us. So we already did the integration and the partnership and when we announced the actually what are the at their maturity level.

We're already live with.

That used in production.

Perfect. That's helpful and then just yet.

77770, 7000 locations that use other.

Perfect and then just given the momentum on the restaurant side do you guys have the capacity to.

Implement where you need to or is there a fair amount of higher you need to do there to help you out with that process.

Oh, no absolutely already.

In fact <unk>.

I believe the only player in this market that is able to serve smbs. So most of our peers have too.

The only target brands that have <unk>.

Our high hundreds of locations because the onboarding is a massive undertaking for them but for us.

A lot of those steps are automated so if we can actually sign up a single location.

Sandwich shop.

And we can onboard them very quickly and we have quite a few of those.

Great I appreciate that came on and then last one just quick any negative impact from the autoworkers strike here in the U S over the last few months.

No no direct impact.

First I'll say on the immediate we don't work with the three big three.

In the U S. The launch is a big partner for Us in Europe, and we haven't seen an extension impact to them.

Maybe in terms of opportunities maybe that conversation slowed a little bit, but like no. We don't theres no direct impact to the extent that things permeate down we haven't really seen an impact from that we are watching it seems.

It seems like things are moving constructively.

Yes, I mean, there is.

<unk>.

No no is the short answer.

Great I appreciate that Natasha congrats on the progress guys. Thanks again.

Thanks, so much Scott.

Thank you.

Ladies and gentlemen, thank you for participating. This concludes today's program you may now disconnect.

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